For investors looking for a more diversified portfolio, VTSAX is the better choice because it holds a much larger portfolio of securities compared to VFIAX which is limited to holding S&P 500 companies only.

Both Vanguard funds charge the same expense ratio of 0.04% and both are categorized as Large Blend, so you can’t distinguish between them on cost and focus. But what about performance, yield, risk, and returns since inception?

For investors seeking broader diversification, VTSAX is the better bet.

The equity characteristics of VTSAX and VFIAX are as follows:

Vanguard Total Stock Market Index Admiral

Vanguard 500 Fund Index Fund Admiral

Number of Stocks

3624

508

Median Market Cap

$65.4 billion

$97 billion

Price/earnings Ratio

22.7x

23.0x

Return on Equity

15.1%

16.0%

Earnings Growth Rate

9.6%

9.4%

Foreign Holdings

0.1%

0.1%

Turnover Rate

4.1%

4.1%

Dividend Distributions

Quarterly

Quarterly

*Source: Vanguard as of 11/30/2017

While both VTSAX and VFIAX have similar price/earnings ratios, earnings growth rates, turnover rates, and foreign holdings amounts, a primary difference is that the median market capitalization of the Vanguard 500 Fund is significantly higher.

If you like the idea of sticking with the biggest companies in the U.S. then VFIAX is the better choice but if you want exposure to small-cap or mid-cap stocks that have the potential to become goliaths one day, but commensurately may have more risk, VTSAX is the better selection.

The equity diversification of the Vanguard Total Stock Market Index Admiral Fund is identical to the overall stock market as shown below:

Vanguard Total Stock Market Index Admiral

CRSP US Total Stock Market Index

Basic Materials

2.70%

2.70%

Consumer Goods

8.90%

8.90%

Consumer Services

12.60%

12.60%

Financials

20.60%

20.60%

Health Care

12.80%

12.80%

Industrials

13.30%

13.30%

Oil & Gas

5.50%

5.50%

Other

0.00%

0.00%

Technology

18.60%

18.60%

Telecommunications

1.80%

1.80%

Utilities

3.20%

3.20%

VTSAX vs VFIAX:
Top 10 Largest Holdings

The top 10 largest holdings for both VTSAX and VFIAX are listed below:

VTSAX Fees vs VFIAX Fees

However, you will be charged a $20 annual account service fee for each Vanguard Brokerage Account, and each individual Vanguard mutual fund holding with a balance of less than $10,000 in the account.

This fee applies to non-retirement accounts, traditional IRAs, Roth IRAs, SEP IRAs, Education Savings Accounts (ESAs), and UGMA/UTMA accounts unless you signed up for account access at vanguard.com and chose electronic delivery of statements, confirmations, as well as Vanguard prospectuses and fund reports.

VTSAX vs VFIAX:
Which Vanguard Fund Is Best?

Both VTSAX and VFIAX have low expense ratios but which is a better bet for your portfolio?

Fund Overview

Vanguard Total Stock Market Index Admiral

Vanguard 500 Fund Index Fund Admiral

Symbol

VTSAX

VFIAX

Asset Class

Stock

Stock

Category

Large Blend

Large Blend

Risk Potential

4 out of 5*

4 out of 5*

Expense Ratio

0.04%

0.04%

Performance Since Inception(as of 12/31/2017)

6.69%

6.12%

SEC Yield

1.75%

1.86%

*according to Vanguard

Compared to other similar funds, the expense ratios for both VFIAX and VTSAX are significantly lower. In fact, the average expense ratio of similar funds is 0.99%.

That means on average over a ten year period, you would pay $2,242 for each $10,000 invested at a similar rival fund compared with $95 for each of the Vanguard funds, representing a total savings of $2,147.

VFIAX vs VTSAX: Summary

Both the Vanguard Total Stock Market Index Fund [VTSAX] and the Vanguard 500 Index Fund Admiral Shares [VFIAX] have low expense ratios of 0.04%, quarterly dividend distributions, and hold identical stocks in their top 10 holdings.

For risk-averse investors, the Vanguard Total Stock Market Index Fund is more diversified because it holds over 3,000 stocks compared to around 500 in the Vanguard 500 Index Fund Admiral Shares.

The returns since inception have been similar for both funds, though the Vanguard Total Stock Market Index Fund has a slightly better performance, averaging annualized gains of 6.69% compared to 6.12% for the Vanguard 500 Index Fund Admiral Shares (as of Q4 2017).

For investors looking for dividend income, VFIAX is the better choice because it has a slightly higher SEC yield of 1.86% compared to 1.75% for VTSAX.

Overall, both funds provide excellent exposure to U.S. equity markets as a low-cost core holding but keep in mind that stock market volatility will affect both positions so you may want to consider these equity funds in addition to the 7 best Vanguard funds.

Have you traded VFIAX or VTSAX? What are the best Vanguard funds that you have invested in? Share your thoughts in the comments below, we would love to hear from you.